What Is Chapter 13 Bankruptcy?
When someone files for Bankruptcy under Chapter 13 of the Bankruptcy Code, the purpose is to have the chance to repay some of all the debts in their name, in better terms, ie. Less or no interest. Different than Chapter 7 which necessitates liquidation of assets, this process calls for restructuring debts which allows for the debtor to apply whatever income they could have in the future to pay off the creditors. Filing Chapter 13 Bankruptcy is applicable for a debtor who possesses a normal income, and thus can afford to request for such accommodations or reductions. The U.S. Bankruptcy Code grants the debtor a ceiling of 5 years, within which the creditors must be repaid. While the lawyer will guard your interests, the total process is carried out under the supervision of the courts.
How Does Chapter 13 Bankruptcy Work?
Although debtors are allowed to keep all of their belongings, the court approves a brand-new interest-free program for repayment. A written plan is created giving details of all the dealings that will occur, and the duration of the aforementioned transactions. The repayment must commence within thirty to forty-five days after the case has commenced. The transitory stage of paying a trustee who then pays a creditor, as in Chapter 7 Bankruptcy is usually eliminated with Chapter 13 Bankruptcy, as payments are made to the trustee in weekly, bi-weekly, or monthly installments over 3 – 5 years. Although, in some cases people may involve a trustee who’d attend to the disbursing of the money to the creditors according to the plan. Also, as per the law the creditors must rigorously adhere the repayment plan authorized by the court and are as a matter of fact prohibited to gather up any claims from the debtor. Your lawyer will prepare a new repayment plan to best suit your situation. The one advantage of Chapter 13 over Chapter 7 Bankruptcy is the full discharge option which is not applicable under Chapter 7 filing. For example, if a debtor manages to complete all necessary payments in the plan, he/she is given a full plan discharge. (There are a few exceptions to this case, which your attorney will guide you about if necessary.) Yet another advantage of the Chapter 13 filing is that a repayment can be created even if creditors disagree with it, as long as it is approved by the Court. Although, in all fairness the court allows creditors also to file an objection, in case they may have any.
Who Can File For Chapter 13 Bankruptcy?
The most important criteria for a person to be able to file for Chapter 13 Bankruptcy is that the individual must have a regular income. There are a few other criterions that must be met for filing a Chapter 13 Bankruptcy. Your attorney will be the best person to introduce you to these!
Steps For Filing Chapter 13 Bankruptcy?
Let’s just say our attorneys will ensure that you don’t need to bog yourself down by trying to understand the complicated details of this answer. Essentially, the filing for Chapter 13 Bankruptcy entails the following.
• Determine whether Chapter 13 is the best solution for you.
• Prepare a budget.
• Examine individual cases to figure out whether require filing of Chapter 13 Bankruptcy, or can be tackled in some other way.
• Determine and implement methods of dealing with secured creditors.
• Devise a chapter 13 plan, and fill out the forms.
• Pay the filing fee and complete the process of filing the forms and pleadings.
• Attend whatever meetings you maybe required to attend, with the creditors, court hearings etc.
• Obtain a discharge once the payments have all been made and the plan terminated.
Bullet points have a habit of making things look neat, orderly and simple. There’s a lot that lies between the lines, and it goes without saying that our attorneys will take care of these things. All you have to do is fill out that evaluation form that will tell you whether you need to file for Bankruptcy in the first place. Thereafter, our lawyer on the other side of that phone call will handle, and solve your financial crisis.
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If you are in need of an aggressive bankruptcy or debt relief attorney, you can call us at 1-517-886-1000, or e-mail us today!